Think of your customers as falling into four groups:
Feels most vulnerable and hardest hit financially. This group reduces all types of spending by eliminating, postponing, decreasing, or substituting purchases. Although lower-income consumers typically fall into this segment, anxious higher-income consumers can as well.
Tend to be resilient and optimistic about the long term but less confident about the prospects for recovery in the near term. Like slam-on-the-brakes consumers, they economize in all areas, though less aggressively. They constitute the largest segment and include the great majority of households unscathed by unemployment, representing a wide range of income levels.
Comfortably Well-Off Consumers:
Feel secure about their ability to ride out current and future bumps in the economy. They consume at near pre-recession levels, though now they tend to be a little more selective (and less conspicuous) about their purchases. The segment consists primarily of people in the top 5% income bracket. It also includes those who are less wealthy but feel confident about the stability of their finances.
Carries on as usual and for the most part remains unconcerned about savings. The consumers in this group respond to the recession mainly by extending their timetables for making major purchases. Typically urban and younger, they are more likely to spend on experiences rather than stuff (with the exception of consumer electronics). They’re unlikely to change their consumption behaviour unless they become unemployed.
Regardless of which group consumers belong to, they prioritise consumption by sorting products and services into four categories:
- Essentials are necessary for survival or perceived as central to well-being.
- Treats are indulgences whose immediate purchase is considered justifiable.
- Postponable’s are needed or desired items whose purchase can be reasonably put off.
- Expendables are perceived as unnecessary or unjustifiable.
Find out where your target audience falls, and then adjust your recession marketing strategy to match HBR’s matrix below:
Recession Marketing Pro Tip:
The trick to successful advertising during a recession lies in consumer psychology and emotion. A recession is a trying time for most consumers, and there’s an undercurrent of fear, worry, and stress beneath the surface. By tapping into and appealing to the emotional side of consumers you have a better chance of connecting with and persuading them.
Talk early, talk often with your customers
While large national businesses will be on the front foot and out in the media during a crisis, local businesses should take the same approach with their key audiences – customers, partners and suppliers. You should:
- Focus on what is important to the customer. For example, Target recently sent out a note from the CEO to customers, describing enhanced cleaning procedures and additional staffing for order pickup and drive up services.
- Provide relief when possible. A number of airlines offered to waive change and cancel fees for coronavirus-related concerns. The move went a long way towards reassuring current customers as well as bringing new ones on board. Insurance companies, in contrast, do not consider the coronavirus a valid reason for cancelling a flight.
- Focus on empathy rather than trying to create selling opportunities. Companies should rethink advertising and promotion strategies to be more in line with the current thinking and mentality of customers.
Be on the front foot & be ahead of the competition
Every community will be affected by the coronavirus. Focus on how you can best help customers, doing the right thing as a business and provide clear communication. You should think about a crisis as a time to enhance relationships with the local communities in which you operate by:
- Providing resources that help others such as cleaning supplies or food for those in quarantine, let staff work from home or by providing paid sick leave.
- Providing clarity about how key groups like staff and customers are being looked after by your business
- Providing information to the local media or via email and social media to showcase what you’re doing, how you’re helping and how others can contribute.
By being open and honest in your communications you will get rewarded by your key audiences. When dealing with uncertainty, leaders need to look at communication from the perspective of your audience and have empathy for them rather than fear of doing the wrong thing.
Businesses never have all the information they need to answer everyone’s queries. So just be clear about what you’re doing, how you’re helping and be positive when answering questions.
Focus on the products & services that move the needle
It’s important to ensure you know your financial position as clearly as possible. You may be required to make important changes and you need to know how this will effect the business. You’ll need to be clear on:
- Which items in our product range should we focus on?
- How can we improve our Working Capital?
- Which pricing tactics to use for different products & services
- Which costs shouldn’t be cut for your long term health
- What discounts and incentives can you get to grow you margin?
Emphasise core values
Businesses that grow over the long term are usually ones that stand out for a product or service and/or the company’s values meet the expectations of the community. You’ll be tempted to price discount but if that isn’t your usual audience you’ll probably do more damage to your long term credibility than what you gain in short term sales from 1-off customers.
Although most companies will make employees redundant, cut costs & place undue pressure on staff or partners to perform, business owners and brands can cement the loyalty of those who remain by remaining consistent to their core values.
The financial pressure will be significant but manage your intangible relationships with people as much as you manage your profit and loss statement. Successful companies do not abandon their marketing strategies in a recession; they adapt them. Successful companies bring everyone along for the ride so that everyone succeeds together.
Focus on what you can control
There are a lot of things you can do to keep the business on solid footing and focused on being positive. Ultimately the messaging in the media will make it difficult for people to be positive or they will feel like they are at the mercy of fate. Successful businesses focus on what they can control and on how they can best meet their customer’s needs.
This will not be an easy time so if you ever need to talk about how you can best take advantage of the current economic conditions and keep your business strong, please contact Passionberry for a free strategic consultation.
Sources used in this blog: